Prominent investor and “Big Short” Michael Burry has recently adjusted his portfolio, establishing a short position in Micron Technology (MU) while simultaneously increasing his existing long positions across five holdings.
In a post he published, Burry revealed that he is shorting Micron at $1,051.87 per share, attributing the stock’s recent astonishing rally to irrational behaviors such as widespread “fear of missing out,” the greater fool theory, and public commitment bias. He further noted that Micron’s interpretation of industry “cyclicality” is unparalleled, with the stock having experienced 34 pullbacks exceeding 30% over the past 42 years. Its current deviation from the 200-day moving average has reached an extreme not seen since 1984, “a level not even reached at the peak of the dot-com bubble.” Although Micron’s share price has surged more than 240% since the start of 2026, it has retraced approximately 10% over the past month. Burry also mentioned that put options on Micron are relatively expensive, and he will seek to add to his put positions if the stock stabilizes and volatility declines. In the same post, he also disclosed increases in his positions in PayPal, Sprouts Farmers Market, Zoetis, Fannie Mae, and Freddie Mac.
Earlier this week, Burry disclosed short bets on other semiconductor stocks, including NVIDIA (NVDA), Applied Materials (AMAT), and the iShares Semiconductor ETF. His core thesis is an expectation of a significant pullback in AI-related chip stocks. Since the start of the year, surging demand for AI computing power has propelled the semiconductor sector to become one of the best-performing segments of the U.S. stock market, with the Philadelphia Semiconductor Index gaining 88% in the second quarter and climbing 101% in the first half of the year. However, Burry believes current sector valuations are at extreme levels, calling the ETF an exceptionally rare and easily identifiable overvalued index, with its deviation from the 200-day moving average reaching the highest level since 2000. Analysts suggest that as AI-concept stocks have rallied sharply, market attention on whether valuations have already priced in excessive future growth expectations is intensifying. Burry’s concentrated shorting of AI industry chain leaders has once again sparked widespread debate over the sustainability of the AI rally.
At the same time, U.S. equity funds are experiencing their fastest capital exodus of the year. According to the latest weekly report from Bank of America (BAC), for the week ending July 1, U.S. equity funds recorded a staggering $17.2 billion in net outflows, marking the largest weekly net redemption since March 2026 and signaling a reversal of the strong inflow momentum seen since the start of the year. As capital fled U.S. equities, investors rotated into investment-grade and high-yield bonds, with the latter posting its largest weekly inflow in nearly a year. Internally, capital continued to concentrate in the technology sector, with tech funds seeing $14.3 billion in inflows for the week.
Against the backdrop of capital outflows, the semiconductor sector has come under particular pressure. This week, persistent skepticism over AI-related valuations continued to weigh on chip stocks, with the Philadelphia Semiconductor Index sliding 11% cumulatively over just two trading sessions. JPMorgan strategists pointed out that the extreme outperformance of U.S. semiconductor stocks relative to AI hyperscaler cloud companies has created an unsustainable valuation gap, which they expect will eventually narrow.
Additionally, BofA’s Bull & Bear Indicator has risen further to 9.5, remaining deep in “extremely bullish” territory. The “sell signal” triggered on May 20 remains active. BofA’s chief investment strategist noted that the upward momentum stems from hedge funds adding long positions and multi-sector capital inflows. Historical data shows that since 2002, the “sell signal” triggered by this indicator has been followed by an average 2% to 3% pullback in global equities over the subsequent 2 to 3 months. Multiple sub-components, such as fund manager positioning and bond fund flows, are all in “extremely bullish” or “bullish” territory, indicating that bullish sentiment has become highly concentrated.
